As we reach this year’s halfway point and companies start reporting their mid-year results, I wanted to take a quick look at China’s telecoms landscape and some of the major highlights over the first half of the year, including a recent surge by China Unicom (HKEx: 762; NYSE: CHU), the country’s second largest mobile carrier. China’s 3 telcos, Unicom, China Mobile (HKEx: 941; NYSE: CHL) and China Telecom (HKEx: 728; NYSE: CHA), all released their June subscriber totals late last week, revealing some subtle but interesting changes from the beginning of the year as the trio look to develop third-generation (3G) mobile services that are the wave of the future.
Tag Archives: China Telecom
Cable Consolidation Gets Subsidy Lift 中国政府为有线电视网络升级提供补贴
Beijing, determined to consolidate the nation’s fragmented cable TV industry by creating a single national operator, is promoting its plan with a new round of subsidies, a move that could ultimately not only benefit not only the new operator but also leading wireless telco China Mobile (HKEx: 941; NYSE: CHL). The fact that China Mobile could benefit from this new subsidy plan seems somewhat ironic, since China Mobile is already one of China’s richest state-run companies, and thus it has little or no need for this kind of cash subsidies from Beijing.
Qualcomm Key on China Mobile iPhone Deal 中国移动能否引进iPhone关键要看高通
Wireless giant China Mobile (HKEx: 941; NYSE: CHL) is sending out some interesting new signals that look like positive developments in its stalled iPhone deal with Apple (Nasdaq: AAPL), as well as its drive to develop its e-commerce business. Let’s look at the iPhone development first, as it’s the one with the most potential to give a much-needed boost to China Mobile and its poorly performing 3G network, which has suffered from technical problems and also lackluster promotion by China Mobile itself.
China Mobile Moves Ahead on 4G, Broadband 中国移动提前推进4G、宽带业务
China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest mobile carrier, is forging ahead with a couple of new initiatives in the broadband and 4G spaces, even as it neglects its 3G mobile business that continues to lose market share. I’m happy to see that the company seems determined to move ahead with broadband, which could become an important new revenue source. But I worry that the telecoms regulator will soon clamp down on China Mobile’s aggressive 4G drive that is increasingly looking like an unlicensed commercial service.
China iPhones: Apple Ties Up With Youku 中国型iPhone：苹果与优酷合作
Smartphone powerhouse Apple (Nasdaq: AAPL) is finally waking up to the importance of the China market, forging a new tie-up with leading online video site Youku (NYSE: YOUK) in bid to incorporate more China-friendly features into its wildly popular iPhones. This latest deal follows the even bigger unconfirmed news last week that Apple was in talks to integrate software from leading Chinese search engine Baidu (Nasdaq: BIDU) into its next generation iPhone, in another major nod to the importance of a market that now accounts for a fifth of Apple’s global sales, second behind only the US. (previous post) What we see here is a growing trend for Apple to integrate leading Chinese Internet software into its next-generation iPhones, which should result in some smart new models when Apple rolls out its latest smartphone later this year. Executives speaking at a developer conference in the US have already touted the fact that the next generation iPhone will have better Chinese input and Mandarin voice recognition capabilities, and I wouldn’t be surprised if we see some more news leaks and announcements in the days ahead for tie-ups with other Chinese Internet leaders like e-commerce giants Alibaba or Jingdong Mall, and microblogging sensation Sina (Nasdaq: SINA) Weibo. Let’s look at this latest announcement, which has Youku saying its video site software will be integrated into the newest versions of Apple’s desktop and mobile operating systems, set for release later this year. (company announcement) The integration should provide a nice boost for Youku, which will solidify its place as the country’s leading online video site with its pending merger with the second largest player, Tudou (Nasdaq: TUDO). Youku-Tudou will control a combined 40 percent of China’s online video market, and the addition of their platforms on the next-generation iPhones and Apple notebook computers could help them to further consolidate their dominance and perhaps even push them to their elusive goal of sustained profitability by year end. iPhones have become a must-have product for gadget lovers in big Chinese cities, with the smartphones now offered in plans by 2 of China’s top telcos, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU). This new drive to create a China-friendly iPhone also hints that Apple could be near one of its biggest objectives for the market, namely the signing of an iPhone deal with China Mobile (HKEx: 941; NYSE: CHL), China’s biggest wireless carrier with two-thirds of the market. Such a deal has been repeatedly delayed due to technological reasons, but this rapid and sudden push to develop a China-friendly iPhone leads me to believe we could also see a China Mobile iPhone deal by the time the newest China iPhone comes out later this year.
Bottom line: Apple’s new tie-up with top online video site Youku is the latest step in its plans to make a China friendly iPhone, which could soon also include a long-awaited deal with China Mobile.
Related postings 相关文章:
◙ Baidu, Sina in Smart Cellphone Tie-Ups 百度、新浪在智能手机领域的合作
◙ China Telecom iPhone Debut Looks Strong 中国电信iPhone初次发售，势头强劲
◙ Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？
Regulator Exposes China Mobile’s 3G Exaggeration 官员披露中国移动虚夸3G用户数量
I’ve always suspected that China Mobile (HKEx: 941; NYSE: CHL), the country’s dominant mobile carrier, vastly exaggerates the size of its 3G business, and now it seems like the more authoritative national telecoms regulator agrees with me. The news shouldn’t come as a shock to anyone, but it does provide a clearer picture of how the 3G market is developing in China, an important indicator since high-speed data services that can be delivered over 3G and upcoming 4G networks is clearly the wave of the future. Let’s look at the latest news, which has an official from the Ministry of Industry and Information Technology saying the number of true 3G subscribers in China is probably around 80 million, or about half the combined total reported by China Mobile, along with its 2 main rivals, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (English article) The official puts the blame for the inflated total figure squarely on China Mobile, saying the nation’s top mobile carrier exaggerates its numbers by including many voice-only users among the subscribers for its 3G network. By comparison, Unicom’s and China Telecom’s 3G subscribers use their service for data-related products such as Internet surfing. China Mobile’s latest figures show the company had 62 million 3G subscribers. So if most of the inflation is coming from China Mobile, it’s probably fair to assume that as many as 50 million or more of the company’s 3G users are simply using the service for voice calling, reducing China Mobile’s total figure to a mere 10 million or so. Even that figure could be high, as I have yet to meet a single person who uses China Mobile’s 3G service for Web surfing, with nearly everyone preferring Unicom and China Telecom. Industry followers know the reason for China Mobile’s anemic 3G performance is largely due to the fact that the government forced it to build a network based on a homegrown technology called TD-SCDMA, which has been plagued with reliability problems and lack of handsets. China Mobile has shown signs of planning to boost its 3G efforts following the recent retirement of long-serving Chairman Wang Jianzhou, announcing a steady stream of new handsets and chips for TD-SCDMA phones. But it’s still unclear how serious the company will be on that front, with its new leaders sending out some troubling signals back in April that China Mobile will continue to focus its efforts on next-generation 4G services, which aren’t expected to receive an official license from the MIIT for at least another couple of years. (previous post) Perhaps this latest indirect criticism by the telecoms regulator will embarrass China Mobile into promoting its 3G service more aggressively, which it really needs to do to remain competitive with Unicom and China Telecom. Otherwise, it could not only become a bit player in the 3G space, but could also see its overall market position quickly slip as more and more mobile users migrate to data service plans.
Bottom line: The industry regulator’s disclosure that China Mobile vastly overstates its 3G subscribers reflects the company’s weak promotion of the service and bodes poorly for its future position.
Related postings 相关文章:
◙ China Telecoms Regulator Plays 3G Target Games 工信部制定3G目标
◙ New China Mobile Chief Sends Bad Signals 中国移动新任领导传递糟糕迹象
◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代
China Mobile Chases Fixed-Line Broadband 中国移动有望获固网牌照
A steady stream of news has been coming from a broadband conference taking place in Beijing this week, including reports that the fixed-line broadband market could soon get a healthy dose of new competition with the entry of wireless giant China Mobile (HKEx: 941; NYSE: CHL) into the mix. (Chinese article) I’ll admit that I was never really clear why China Mobile had never previously entered the lucrative market for fixed-line broadband services, which is now dominated by its 2 main rivals China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE CHU), who offer services over their legacy networks inherited from the break up of China’s former fixed-line phone monopoly. After reading the reports, I’ve learned that China Mobile was never formally licensed to directly offer fixed-line broadband and instead was only allowed to offer such service through its China Railcom unit, the former telecoms unit of China’s national rail operator that China Mobile took over as part of an industry restructuring 3 years ago. Apparently that restriction was preventing China Mobile from getting many customers for its fixed-line broadband service, according to the reports. It looks like that could soon change and China Mobile could finally get the license it’s seeking to offer fixed-line broadband services directly. The biggest new factor in the equation is the ongoing anti-monopoly investigation launched last year by the powerful National Development and Reform Commission (NDRC) into China Telecom and Unicom over their fixed-line broadband service. (previous post) China Telecom and Unicom have taken steps to improve their broadband services since then, but the NDRC would certainly be pleased to see another major new player like China Mobile come into the space. What’s more, China is in the process of consolidating its many regional cable TV networks into a single operator, which could offer an instant wired-line platform for China Mobile to offer its service over. We saw signs last year that China Mobile was looking for just such a tie-up with the new cable TV operator, and broadband Internet service could be one of the easiest and most logical products for it to launch in such a tie-up. (previous post) Lastly, China Mobile has new top leadership following the recent retirement of its long-serving chairman, and those leaders are showing early signs of taking more aggressive steps to jump-start the company’s flagging growth with just this kind of initiative. If things keep moving in this direction, which looks likely, I predict we could see China Mobile announce a tie-up with the new national cable TV operator as soon as year-end, and for it to also announce a new fixed-line broadband license around the same time.
Bottom line: China Mobile could tie-up with the country’s new national cable TV operator as soon as year-end, and launch a new fixed-line broadband service soon after that.
Related postings 相关文章:
◙ China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司
◙ China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代
◙ Anti-Monopoly Regulator Makes Poor Choice in Chasing China Telecom 中国反垄断初试牛刀 选错对象
China Opening Telecoms With Cloud Centers 云计算或成为中国开放电信服务市场的突破口
China’s telecoms companies have all rushed to set up new cloud computing centers, the massive data and software warehouses that allow computer users to do all their computing remotely from relatively simple desktop and laptop PCs. But now it appears that Beijing wants to develop this area so much that it’s also opening up the sector to foreign companies, with Microsoft (Nasdaq: MSFT) the latest to detail its plans for the cloud computing space in China. Media are quoting a top Microsoft global executive saying the company is applying for permission to build cloud centers in China (English article), after Microsoft said late last year it was studying such a plan for the interior city of Chongqing. (previous post) Microsoft’s entry to the space would come months after IBM (NYSE: IBM) announced in January it would help to build a massive campus near Beijing that would become China’s largest cloud computing center. (English article) From an investors perspective, these 2 developments look very interesting not only for their money-earning potential, but also because they seem to show that Beijing may finally be starting to allow foreign firms to make major investments in the lucrative Chinese telecoms services market, after years of locking them out despite agreeing to open the space under its commitments when it entered the World Trade Organization 10 years ago. This kind of opening would be consistent with recent remarks from the telecoms regulator, which said in March that the government has officially made boosting private investment in telecoms infrastructure part of its new policy. (previous post) Cloud computing would be a relatively easy area to open up to foreign investment, since right now the industry is at a very low stage of development and clearly the arrival of foreign technology and expertise from big names like Microsoft and IBM could quickly build the sector into a world-class player. Another opening of China’s telecoms services market could also come in the next year or 2 if one of China’s 3 telcos signs a mobile virtual network operator (MVNO) agreement with a major foreign telco. Such agreements have yet to come to China but are popular in other markets, and usually see a foreign telco offer its own branded service overseas using an existing carrier’s network. China Telecom (HKEx: 728) last week launched the first MVNO for a Chinese company with a partner in Britain, and I predicted that move could ultimately see the Chinese telco reciprocate by signing an MVNO that would allow a foreign telco to offer service in China. (previous post) This latest cloud development, along with the potential for a foreign MVNO in China, does seem to show that China may finally be serious about opening up its telecoms services market. Earning profits, meanwhile, could be a more difficult challenge in a market this is already quite competitive in many areas.
Bottom line: Microsoft’s plan to build cloud centers in China is the latest sign of Beijing’s intent to open its telecoms services market to foreign investment.
Related postings 相关文章:
◙ Telecoms Infrastructure Prepares to Open 中国电信基建市场或更开放
◙ China Telecom Opens Door for Foreign Telcos 中国电信在英国推出MVNO业务 或为外国电信企业进入中国铺路
China Telecom Opens Door for Foreign Telcos 中国电信在英国推出MVNO业务 或为外国电信企业进入中国铺路
Bottom line: China Telecom’s move into Britain means Beijing may soon let foreign telcos enter China as mobile virtual network operators, with a first deal possible in the next 18 months.
Related postings 相关文章:
◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力
◙ Telecoms Infrastructure Prepares to Open 中国电信基建市场或更开放
◙ China 3G: Entering Slow-Growth Phase? 中国3G：进入缓慢增长阶段？
China Mobile Nears iPhone Deal 中国移动引进iPhone在即
My headline for this post may be a little misleading, as I’m purely guessing based on the latest media reports that China’s dominant wireless carrier China Mobile (HKEx: 941; NYSE: CHL) may soon sign a long-anticipated deal to sell an Apple (Nasdaq: AAPL) iPhone that can run on its struggling 3 network based on a homegrown Chinese technology. In fact, the actual news in this case is relatively simple, with China Mobile’s new Chairman Xi Guohua telling investors at the company’s annual meeting in Hong Kong that he is talking with Apple about developing an iPhone for a technology called TD-SCDMA, which is the basis for China Mobile’s 3G network. (English article; Chinese article) Xi, who took over as China Mobile’s chairman in March after the retirement of his long-serving predecessor Wang Jianzhou, didn’t say very much more on the subject, except to add that there were no guarantees that a deal would be reached. The 2 sides had actually previously talked about a TD-SCDMA iPhone as much as a year ago, but they never reached a deal for reasons that were never disclosed. My guess is that the conservative Wang wanted Apple to take most of the risk for developing the TD-SCDMA iPhone, figuring that Apple wouldn’t mind spending lots of its own R&D dollars to develop a model for the world’s largest mobile carrier with more than 600 million subscribers. If that was the case, Apple clearly balked at taking such risk by itself and the 2 sides never reached a deal that would have clearly benefited both, especially China Mobile as it steadily lost 3G market share to more aggressive rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), which both offer iPhones for their networks. But the situation may have taken a major turn in March when Wang finally retired after months of rumors, leaving Xi to finally take the reins of a company that has seen its growth slow to a crawl in the last 3 years under Wang’s conservative leadership. Not long after Wang left, Apple’s Tim Cook came to China for his own first visit since taking over as the company’s chief executive from Steve Jobs. (previous post) Media closely followed Cook’s trip, which included meetings with top government and industry leaders even though no mention was ever made of a visit to China Mobile. Still, I am quite sure that Cook must have met with Xi and other top China Mobile executives during the visit, with discussion of restarting the stalled TD-SCDMA iPhone talks most likely high on the agenda. Unlike Wang, Xi must realize that his company needs to take some major action to develop its 3G business, which is where the future of mobile communications lies. China Mobile already has a huge cash pile that it never seems to spend or return to investors, and I suspect that a newly empowered Xi will finally be willing to spend some of that money to share more of the risk with Apple for developing a TD-SCDMA iPhone. If that’s the case, look for the 2 sides to make rapid progress in their current talks and announce a long-delayed and much needed iPhone deal in the next 2-3 months, which could greatly boost China Mobile’s prospects in the 3G space and its broader overall outlook.
Bottom line: Apple’s stalled iPhone talks with China Mobile appear to have restarted under the carrier’s new, more progressive leadership, with a long awaited deal possible in the next 2-3 months.
Related postings 相关文章:
◙ New Developments, Including iPhone Deal, Heat Up 3G, 4G 中国电信iPhone销售和日益升温的3G、4G最新进展
◙ Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？
◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城
China Telecoms Regulator Plays 3G Target Games 工信部制定3G目标
China’s telecoms regulator has just announced an ambitious new 3G target for the country’s three major wireless carriers, continuing a dangerous tradition of pressuring big State-run firms by challenging them with difficult and often unattainable targets set by Beijing. While planning and setting targets are part of any good business practice, such activities should be left to the companies themselves rather than central government officials. The Ministry of Industry and Information Technology (MIIT) announced last week it wanted the nation’s three major mobile companies to sign up more than 450 million 3G subscribers over the next three years, with users of these state-of-the-art networks to account for 36 percent of the nation’s total mobile subscribers by that time. (Chinese article) These targets continue a tradition begun in 1949 when the nation’s economy was centrally planned and officials in Beijing set specific numeric targets for a range of industries under macroeconomic plans created every five years. But such plans have become anathema to today’s more market-oriented economy, and this latest one for 3G will place great pressure on the nation’s three mobile carriers, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). Setting overly-ambitious targets could actually prove counterproductive if it prompts the three carriers to resort to cutthroat competition and the signing up of fake subscribers. Since starting to build their newest networks in 2009, the three carriers have signed up about 150 million 3G service subscribers, accounting for about 14 percent of the nation’s total mobile subscribers. That means the number of 3G subscribers must triple between now and 2015 to meet the new target, a growth rate that is certainly attainable, but quite ambitious. In the past, Beijing has set similarly challenging goals for many of China’s biggest industries, often with undesirable results. In one of the most glaring cases, the nation’s banking sector was pressured to boost lending after Beijing announced a 4 trillion yuan economic stimulus plan to spur domestic consumption at the height of the global financial crisis. As a result, most of the nation’s banks are now dangerously undercapitalized and facing a potential glut in bad loans, many made to local governments for unneeded infrastructure projects. There are already signs that China’s three wireless carriers may be getting reckless in their zeal to ink more 3G subscribers. Many believe that China Mobile is inflating its 3G figures, possibly by selling large numbers of subscriptions to corporations that don’t really use the service. Meanwhile, China Telecom’s earnings suffered in its latest reporting quarter due to its aggressive 3G marketing strategy. Rather than set numbers for the three operators, the regulator should offer broader guidance and policy support to the companies and let them set their own targets. Otherwise, it could discover the carriers have met their ambitious targets only with the help of inflated figures and at the cost of rampant competition.
Bottom line: The telecoms regulator’s new ambitious 3G targets could force China’s 3 telcos into cutthroat competition and user inflation to meet those goals.
Related postings 相关文章:
◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城
